Marketing Strategic Analysis: Goody's SA case study
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Transcript of Marketing Strategic Analysis: Goody's SA case study
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M.Sc in Marketing Management
Strategy & Leadership in Marketing
Stategic Analysis of Goody’s S.A
SPYROS LANGKOS
ID: 100285557
Tutor: Mr. Nikolaos Kitonakis
Athens, March 2014
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“ The challenge of the retail business is the human condition. “
Howard Schultz, CEO of Starbuck’s
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TABLE OF CONTENTS
1. INTRODUCTION ......................................................................................................... 4
2. EXTERNAL ENVIRONMENT ANALYSIS ................................................................ 5
3. MACRO ENVIRONMENT .......................................................................................... 7
4. VALUE-CHAIN SOURCES OF COMPETITIVE ADVANTAGE ............................. 9
5. LOW-COST RETAILER ENTERING THE MARKET ............................................ 11
6. APPENDICES ........................................................................................................... 13
7. REFERENCES .......................................................................................................... 16
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1. INTRODUCTION
The aim of this assignment is to provide an analysis of Goody’s S.A., the leading fast
food chain in Greece, from a strategic marketing perspective. After briefly presenting
the profile of the company, the assignment analyzes the external and internal
environment, paying attention to the factors that affect their business, as well as the
sources of its competitive advantages. Following these, a hypothetic case is
analyzed, whereby a new low-cost retailer enters the fast-food industry in Greece.
Company profile
Goody’s is the leading fast-food chain in Greece, and belongs to Vivartia Group. The
company was founded in Thessaloniki by Mr. John Dionisiadis, who opened the first
Goody’s store in 1975. The first store in Athens was established in 1981. In 1994,
Goody’s entered the Athens Stock Exchange, while in 1997 the company started
expanding its business to foreign markets, and specifically in Portugal, Bulgaria, and
Cyprus. Nowadays, the company operates approximately 180 fast-food stores in
Greece, 6 in Cyprus, and 1 in Bulgaria, occupying about 5,000 employees in total
(Vivartia, 2014).
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2. MACRO-ENVIROMENTAL ANALYSIS
PEST analysis
Political and legal conditions
The legal framework surrounding the Greek food industry is very strict, especially as
far as store hygiene and quality of ingredients and materials are concerned. The
National Ministry of Health conducts unexpected inspections in restaurants of all
kinds, in order to identify whether they comply with health and hygiene rules,
especially as far as the kitchen and restroom areas are concerned. At the same
time, inspections are also made regarding whether ingredients and food products
are kept in places where their freshness is enhanced, and of course regarding
whether they have overcome their expiry date (Euromonitor International, 2013).
Economic conditions
Greek economic conditions are mainly characterized by the economic crisis that has
hit the country since the second half of 2008. The most important consequences are
the imposition of two packages of austerity measures, which have led to diminishing
disposable incomes, the closing down of thousands of Greek companies, as well as
the overall cash flow difficulties mainly caused by the limited loan offerings from
Greek banks.
As far as the fast food industry is concerned, sales declined by 12% in 2012,
because of the turbulent economic conditions in Greece and despite the opposite
predictions for the sector derived from the overall lower prices charged. Forecasts
for the years to come are pessimistic, predicting that the sector will be in decline by
a constant 5% at least until the end of 2017 (Euromonitor International, 2013).
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Social conditions
Greek consumers have seen their disposable incomes shrinking due to the
economic crisis and the associated increase in unemployment rates, which have
reached almost 30% nowadays. For this reason, Greek consumers have been very
sensitive towards price issues, while in the case of food products they have also
become very sensitive towards health issues, especially when it comes to make
purchases for their children. This is the reason for which fast food has become less
popular, since it is perceived as unhealthy. Home-deliveries have generally
increased, due to increasing home gatherings made by Greek consumers, while
students and professional favour more take aways (Euromonitor International,
2013).
Technological conditions
The expansion of the use of the Internet and the improvement in broadband
connections is definitely the most important technological advancement in Greece
during the last decade. Indeed, except for making Greek consumers become more
informed regarding products and services, and thus more demanding, companies
increasingly use the Internet to create their online sales and promotional platforms.
Advancements in information and food-preparation technologies have also given the
opportunities to food service providers to become more efficient both in terms of
their costs and operations (Euromonitor International, 2013).
Annual disposable income - (Euromonitor International, 2013
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3. MICRO-EVNIRONMENT
Porter’s Five Forces
Bargaining power of buyers
The bargaining power of buyers is high in the Greek fast-food industry. Greek
consumers have the option to choose from a number of alternative providers
for any reason. Their power is even higher, taking into consideration that they
do not necessarily have to seek for a burger provider, but they may rather
switch to different alternatives, such as traditional food choices which are
more relevant to their culture.
Bargaining power of suppliers
The bargaining power of suppliers is also high in the Greek fast-food industry
in Greece. Retailers have the option to choose from a number of alternatives,
and shall easily choose to switch to one of them, if for some reason they are
disappointed with their current one.
Threat of substitutes
The threat of substitutes is high in the fast-food industry in Greece. Indeed,
there are a number of different fast-food options, if it is taken for granted that
Goody’s mainly offers burgers. As such, Greek consumers may decide to
purchase sandwiches, Greek souvlaki, pizzas, crepes, as well as bakery
products, such as cheese pies. Of course, full-service restaurants may also
be perceived as substitutes to fast-food retailers, although they are indirect
ones.
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Threat of new entrants
There are significant barriers to entering the fast-food industry in Greece. One
of this is the high cost of establishing a business in Greece, as well as the
high risk derived from the turbulent economic conditions in the country
nowadays. Except for that, Greek consumers have been loyal to Goody’s and
other major brands, thereby making it even more difficult for a new company
to enter the particular sector. However, given the diminishing consumer
incomes, Greek consumers will increasingly seek for fast-food, and thus
cheaper food options, thereby making the sector rather attractive.
Competition
Goody’s leads the Greek fast-food industry with a market share of 30.2% in
the end of 2012. Everest S.A. is the most important competitor of Goody’s the
company also belonging to Vivartia group and holding market share of 19.6%
in the end of 2012. Independent operators represent 83% of overall fast-food
outlets, while bakery fast food also imposes high competition, due to the value
for money offered in terms of breakfast, coffee, and lunch on-the-go. Price
and size of portion are the major critical success factors in the industry,
together with new product development (Euromonitor International, 2013).
Business environment - (Euromonitor International, 2013)
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4. VALUE-CHAIN SOURCES OF COMPETITIVE ADVANTAGE
The major source of the competitive advantage of Goody’s is certainly its long
presence in the Greek market, which has maintained the customer base and
loyalty regarding the company within a national context. Except for that, and
taking Porter’s generic value chain into consideration, the food products
offered by the company are very tasty and perceived as of higher quality than
competitive ones, and so is the service offered, especially nowadays that
home-delivery service has also been added. Goody’s has also escaped from
the traditional mode of a fast-food chain, also offering more complete meals
for all tastes and all types of customers. Another source of competitive
advantage is that Goody’s has established a store at almost every single big
city and island in Greece. Moreover, the origin of the company itself is a
source of competitive advantage, given that Greek consumers favour Greek
companies, as a means of supporting them during the crisis. Together with
the above, Goody’s is famous for offering a good working environment that
keeps employees satisfied. Last but not least, the marketing campaigns of
Goody’s also add value to the company, with the campaign “Argoudaki” being
at the forefront.
SWOT ANALYSIS
Strengths
- Greek company
- Strong brand name
- String customer base and loyalty
- Wide variety of burgers and other food options
- Many retail stores allover Greece
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- International presence
- Belonging to a powerful group
- Its basic competitor belongs to the same group
- Home- delivery service
- Employee satisfaction
Weaknesses
- Relatively expensive with respect to competition
- Diminishing market share since 2009
Opportunities
- Greek consumers seek for cheaper meal solutions due to the economic
crisis
- Information technology advancements, which offer the development of
different business platforms (e.g. online retailing)
- Advancements in food-preparation technologies
Threats
- Fast food is generally perceived as unhealthy
- Turbulent economic conditions in Greece
- High corporate taxation in Greece
- Diminishing consumers’ incomes
- Strict health and hygiene regulations
- Negative current and forecasted performance of the sector
- Intense direct and indirect competition
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5. LOW-COST RETAILER ENTERING THE MARKET
The scenario of the case discussed in this assignment suggests, a new low-
cost retailer enters the fast-food industry in Greece, which obviously affects
the business of Goody’s. Within this context, there are two ways in which the
company could respond. The first is to continue following a differentiation
strategy, focusing on the different nature of the products it offers, compared
with the low-cost competitor (as well as other competitors). According to this
strategy, companies offer products and services, or product and service
features that consumers perceive as unique (Gamble et al., 2010).
More specifically, and also taking into consideration Greek consumers’
emphasis on eating healthy foods, the marketing campaigns of Goody’s shall
emphasize on the fact that the food products offered by the company are
made of fresh and high-quality materials and ingredients, and for this reason
their cost is higher than that of low-cost competitors, and the new one that has
emerged in specific. The campaigns may also go even further and talk about
quality control mechanisms employed by the company, so as to ensure that
the quality of food products offered by Goody’s is really high, thereby
safeguarding human health. Last but not least, Goody’s shall also promote its
long history and presence in the Greek market, which have made it
trustworthy and reliable in the minds of Greek consumers, as well as the
innovative home-delivery service that no other fast food chain of this type
offers. Following a differentiation strategy, Goody’s would also support the
way it has been positioned in the Greek market for so many years.
Value Chain
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Another response for Goody’s would be to slightly reduce its prices, as a
means of becoming more competitive, without, however, altering the way it
has been positioned in the market, as previously outlined. To do so, the
company needs to combine its differentiation strategy with that of cost-
leadership. According to this strategy, a company competes in the market by
having lower production costs than its competitors, thereby being able to offer
lower prices to its customers or increase its profitability margin (Joshi et al.,
2005). Towards this end, Goody’s shall improve its operating efficiency, by
investing in even higher food preparation technologies, as well as reduce
operating costs by investing in more efficient information technologies,
renewable energy sources, and overall better resource allocation. In this case,
Goody’s will be able to support its positioning in the market, while at the same
time offering more competitive prices than before, so as to close the price gap
with the low-cost competitor and be consistent with the economic conditions in
Greece and the diminishing incomes of Greek consumers.
Types of shopping and growth of Internet retailing
(Euromonitor International, 2013)
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6. APENDICIES
A] Greece’s public debt
(Euromonitor International, 2013)
B] GDP growth in Greece
(Euromonitor International, 2013)
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C] The fast food industry in Greece - Sales by category
(Euromonitor International, 2013)
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7. REFERENCES
Anthony Rezitis & Maria A. Kalantzi (2010). Investigating market structure of
the Greek food and beverages manufacturing industry: A Hall-Roeger
approach, AGRICULTURAL ECOOMICS REVIEW, Vol 13, No 1
Research and Markets. Greece Food and Drink Report. Q1 2012.
Available at: http://www.researchandmarkets.com/reports/1998934/ ,
accessed on 14-03-2014.
N. Demiris, B. Giannoulidou, et al (2007). Food Industry in Greece.
Ray Winger Gavin Wall (2006). Food product innovation: A background
paper. FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED
NATIONS, Rome
Koukoulis A. & Papadosifakis K. (Nov. 2010). Bachelor thesis: Analysis of
Goody’s S.A. TEI of Crete.
David J. Ketchen , Jr. & Alan B. Eisner. (2008-2009). Strategy. McGraw-
Hill/Irwin
Pepe Martinez (2012). The Consumer Mind: brand perception and the
implications for marketers. Millward Brown. KoganPage.
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Blythe Jim (2013). Consumer Behaviour. 2nd Edition. Sage Publications Ltd.
55 City Road. London.
Kotler P. et al (2012). Marketing Management. 2nd Edition. Pearson Education
Limited. Edinburgh Gate. Harlow. England
Euromonitor International (2013), “Consumer lifestyles in Greece”, available
at: www.portal.euromonitor.com , accessed on 06-02-2014.
Euromonitor International (2013), “Fast Food in Greece”, available at:
www.portal.euromonitor.com , accessed on 06-02-2014.
Joshi, R. M. (2005), International Marketing, Oxford University Press.
Euromonitor International (2013), “Greece: Country Factfile”, available at:
www.portal.euromonitor.com , accessed on 06-02-2014.
Euromonitor International (2013), “Technology, communications, and media:
Greece”, available at www.portal.euromonitor.com , accessed on 06-02-2014.
Gamble, A., Thompson, A., Jr., & Strickland, A. J. (2010), Crafting and
executing strategy: the quest for competitive advantage: concepts and cases,
17th edition, Boston: McGraw-Hill/Irwin Publications.
Vivartia (2014), “Goody’s”, available at:
http://www.vivartia.com/?page_id=690, accessed on 07-02-2014.